INDIA\'S STATE-OWNED EXPORT CREDIT INSURER ECGC BLACKLISTS THE INDIAN ARM OF GLOBAL REINSURANCE BROKER WILLIS OVER DUES

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INDIA’S state-owned export credit insurer ECGC has blacklisted the Indian arm of global reinsurance broker Willis over a decade-old dispute with the broker’s Indian partner. The dispute nevertheless does not bode well for Willis, which is one of the world’s largest reinsurance brokers.

The dispute with the Indian partner goes back to 2000 but has now come to a head with ECGC, asking IRDA to take action and direct the Indian partner Bhaichand Amoluk Consultancy (BACS) to repay dues to the extent of Rs 3.8 crore.

The Willis representative in India was unavailable for comment. But sources said the dispute pertained to a transaction between ECGC and BACS, and Willis was not connected in the dispute. However, BACS is a majority shareholder and promoter of Willis India. According to foreign investment guidelines, Willis' holding in the Indian venture is capped at 26%.

Willis was in the news last month after it acquired naming rights for America's tallest building — Chicago’s Sears Towers — following a real estate deal where it acquired a sizeable office space in the skyscraper. When contacted, ECGC CMD AV Muralidharan confirmed that there was a dispute but refused to comment further, stating that the matter was sub-judice as ECGC had initiated legal action against the Indian broker.

According to sources, IRDA may find itself in a dilemma in the matter. The dispute dates back to a time when BACS was not a regulated entity and IRDA broking regulations were not in place. In its communication to the insurance regulator, ECGC claimed that it was yet to receive Rs 3.98 crore from BACS. The export insurer also added that BACS had collected money due to ECGC from Aon — another reinsurance intermediary in London, but the money was not passed on to ECGC.

In its communication to Willis, ECGC pointed out that the broking firm had been empanelled for soliciting credit insurance business from 2007. Interestingly, in its reasons for terminating the arrangement with Wills, ECGC has cited the unsatisfactory experience with BACS and has added that it not aware that Willis is a joint venture with BACS.

Unlike in domestic insurance, brokers play a significant role in reinsurance where they are present in almost every deal. In many occasions, the premium passes through the reinsurance broker, unlike in the domestic market where premium is paid directly from the client to the insurance company.

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